Transcripts For BLOOMBERG Countdown 20160704

They failed to produce a majority government putting credit at risk. Anna welcome to countdown. It is 6 00 in the morning here in london, Independence Day in the united states. Markets. To the wipingn the asiapacific out brexit losses but if that makes you think we are also seeing money going into safe haven assets. There is a surge going into the silver, indicated by this dotted line. Weve seen a surge in safe haven assets because part of the enthusiasm for equity markets a nature comes from the expectation that we might see more support from Central Banks. Lets put up the risk radar. We mentioned the bounce in equity markets wiping out brexit losses and commodities also on the rise. Commodities, the wti price is fairly flat. Nigeria having a trouble enforcing a ceasefire in oriole country. We have Seen Movement in the Australian Dollar. It dropped but then recovered. Neither large party in australia managed a majority more coming up throughout the hour. We will have more analysis from sydney shortly. George osborne had set the goal of lowering britains Corporate Tax rate is 15 to keep businesses investing in the country. He expects the result of the referendum and wants to mitigate of thenomic impact brexit. Australias election has resulted in Neither Party having enough seats to form a government, undermining their Credit Rating, possibly. There are limited implications but it indicates a wider deficit. The Election Results have yet to be completely finalized. An increasing number of economists predict that chinese banks will receive the bailout within two years. Is among thebank respondents in the latest inswerve saying they expect the move. The majority asked believed cost every capitalization will receive 0. 5 billion. One of londons biggest law firms has threatened to take action if the British Government tries to initiate the process of leaving the eu without consulting parliament. Article 50 canof only be started with parliaments consent. Baghdadliest attack in in one year kills at least 115 people. A truck exploded in a mostly shia neighborhood despite heavy security. The area has many stories and restaurants. The streets were filled with people after breaking ramadan fast. Global news 24 hours a day in more than 120 countries and you can find more stories on our bloomberg app. Anna thank you. Lets check out how the markets are behaving. We have the latest action on the markets from hong kong. Markets behaving nicely. A good way to kick off the trading week. Hong kong, some robust trade happening that we are in the form of this asian rally. We are now back to know where we were before the brexit volatility started. I know you have more analysis on australia to come, but sydney is up by 0. 25 . The week is turning positive. We actually spoke to jpmorgan assetmanagement and they said that in the longer term, there are issues given the political instability and the possibility of a Hung Parliament the when it comes to the shortterm sentiment, we are not seeing that playing out. Some weakness in the Australian Dollar. Also, the weaker yen, the nikkei 225 up by 1. 5 . China stocks rallying to a twomonth high. This rally is being driven regionally by this search we are seeing in commodity prices. Materials, copper, steel policy and games today. From thest gainers sydney session, gold and silver surging. New crest mining up over 4 . Doingf these large minors well. It is an interesting situation where you have a risk on the session but also money going into some of these safe havens. Anna thank you. The latest on the asian session. One week after the brazen, france is pushing ahead. The French Economy minister has laid out why he thinks that paris is the new home for banking operations. Think for a lot of financial players and will beions, the brexit a pushing mark because it will depend upon the access to europe. It will depend upon the organization of the brexit. Role is not to play on uncertainties because we are collectively responsible and i do iswhat we have to respect the vote and to organize a brexit but at the same time, it could be a positive for our Financial Sector because we have a lot of financial players and institutions and, definitely, we can welcome a lot of institutions who would like to join. We are live in paris now. Good morning. The finance minister seeming confident that they could get a piece. Analysts also point out that taxes might keep certain institutions in london . Yes. Ter they are trying to compete to get a piece of the financial cake and the prices the 500 trillion market. A lot of the clearing in europe, about 70 of the action traders need to complete their transaction. Minister told us that he believes paris is a better place than frankfurt to move then clearing business from london to paris despite, of course, the Bad Reputation of france. He was trying to defend the image saying that the violence we have seen on the sidelines of the strikes only comes through a tiny minority and the labor law reform will be passed by the end of the month. Before him, the french finance minister was more cautious and the idea, saying that we should not divide the spoils, that he did not appreciate when david the red carpetut to france and he did not intend to roll out the carpet in the other direction. Anna we will watch that with interest. He also spoke to many ceos over the weekend, who were present en provence. What of the concerned about the consequences of the brexit . I could feel some anxiety, like what i felt a few exit p duringr the he wasof theovence not the only one who thought that france could turn a brexit into profit for french businesses. The euronext ceo believes that paris and amsterdam are better or dublin, frankfurt saying that the brexit could make the eurozone and the and asnt more relevant market participants, we will have to get closer to the clients. Outside the eu, things have to be relocated. With a number of companies and , it could be a legitimate player. He also told me that for the first time in paris, he sees alignment between the large paribas, large and the governments in order to promote the attractiveness of harris. Anna thank you. The head of the u. K. Rate strategy is with us in the studio. Good morning. Away from the corporate agenda lets get back to the macro story around the eu. In the wake of the vote, do you sense we will see closer integration . Slower integration . We are getting mixed signals. Guest of course, they have a lot of issues to cope with as a result of the fallout. It is obviously going to be a better outlet for the eu if it can integrate. Decisions will need to be made if integration is the way that the eurozone wants to move, some assetsattention and risk can start to reduce but there are risks that it moves and the other direction that is why we are seeing Rapid Movement from central bankers and politicians to shore things up. Anna how seriously our clients uitaly . About a q the vote is seen as a step in the journey. Its partly a consequence of what has been going on in the eu. For some, it have to do with migration. That is partly because of the economic difficulties of some european countries. This seems to be a process and this is why more integration is needed. And wide isst far growing and that does lead to greater risk at the moment it seems that the u. K. Is an isolated case but not necessarily anna what do you expect from the ecb . Analysts have been reevaluating what the brexit will do to , the averageth forecast seems to be 0. 6 percentage growth taken off, probably not based on the eurozone falling apart but a conservative assessment of politically where does this go. How does the ecb respond . Well, they are so many uncertainties. How much depends Economic Growth slows. The pressure is not that great. They are already in an easing mode but as things so abruptly, then have to assist with asset purchases and at some point, over the coming months, they will have to make some announcement of the economic fallout has yet is toertain and i think we need try and have a common attitude to see how it evolves before any central bankers are allowed to [inaudible] ,nna here is your week ahead u. S. Stocks and bonds are closed today for Independence Day. Holdrow, mark carney will a News Conference to present the Financial Stability report. On wednesday, the release of the june policy meeting. Barack obama will attend the 2016 nato summit in warsaw to me with the president s of the European Council and on friday, the nonfarm payroll. , cranking up the heat, terrys turning told reese turning on teresa they. This is bloomberg. Teresag may. Nin on this is bloomberg. Anna welcome back, this is countdown. 1 18 in hong kong, 6 18 here in london. Rosalind bank of china seeking to raise a billion dollars for what could be the worlds biggest ipo this year. Are said to have filed applications last week. Analysts are confident that the ipo will be a success. Shares in china bank have dropped by 10 . The developer was halted in december after it emerged that a consortium had been purchasing equity. Dhabitional bank of abu has merged with the first gulf been to create a regional powerhouse with 175 billion. It will operate under the National Bank of abu dhabi name. It will allow them to better compete with regional rivals like qatar National Bank. Misses deliveries because slump. Oduction the carmaker deliver just over 14,000 vehicles in the second quarter. That is your Bloomberg Business flash. Anna thank you. Have minister candidates turned on teresa may. Michael grove said the country needs someone who supported brexit. I want to advance arguments in principle. We need to have the next Prime Minister someone who believes that britain should be outside the European Union and argued for it. I have always taken difficult decisions because about my principles first. Thousands marched on london to protest the decision to leave the eu. John race is with us. Looking very much more at this specific u. K. Implications here, then, john, the chancellor flooding this idea of a Corporation Tax rate that we are free the plan does this what does this tell you . It is certainly interesting. It changes tone when there were warnings about emergency budgets moving in the opposite direction. It is interesting because if the u. K. Is going to leave it is going to have to strike in a different direction in many ways. Trade agreements struck bilaterally, these are new initiatives that they will have to pursue. To an extent, it is reassuring that the chancellor is moving swiftly to shore up the economic problems that may lie ahead. Anna there does seem to be some decisionmaking. Chart shows below 1 . The number of conflicting forces you think that the status of the safe haven outweighs anything that could detract . Guest clearly that is what we had seen since the vote. Fear is the safe haven demand, over nominal growth expectations that need to be factored, the possibility that the bank of england may have to restart quantitative easing, all of that pushing yields lower. Anna concerns about Credit Rating . Guest possibly, and overseas investors may be wary of increasing exposure to u. K. Assets until they are confident that the pound has finished falling. The strongest forces towards lower yields. Know,in terms of what we we have our from George Osborne about the 15 tax but also abandoning certain targets. It is a long time to wait to get some clarity. Guest it is. The political backdrop is not helpful. This is all about uncertainty at the moment. It is probably just as well. We need to see how the economic data, when the dust settles. Numbers will relate to the time before the brexit votes. End of only be at the this year we make a clarity on how the economy has been affected. Hopefully by then, we will have political stability. Anna do you think that the ovi needs to wait to see the evidence in the data before we can action from them yet come mark carney speaks tomorrow. There is a toolbox of things that were put in place around the time of the financial crisis that they can use that are not around the Monetary Policy story. Ease policy but again, until they had seen the evidence of what the economy is doing, it is hard to know how. Hey will calibrate that liquidity operations were already in place. Said, the Financial Stability report tomorrow will enable them to give views as to how much more support might be needed. When the data reflects what happen, and what will they will be in a position to the side the setting for Monetary Policy good anna politically, mark carney is under pressure under fire during the campaign because the leave side said that he had got to politically involved. It is interesting to see the names now praising his handling of the economy are not expecting any sort of change at the top . Guest we knew the referendum was coming and we knew there is never whatever the results of the the bank of england had to strike a balance between not seeming to politically involved with the same Time Technology was as we all know a very large risk event so i think for the markets i think the bank of england was seen as treading a line appropriately and now they obviously have to address with ac and the fallout. Eric nielseneading talking about how the market could be underestimating the chance that politicians are actually going to be tempted to tear up residual relationships. Are we in danger of underestimating how far away the u. K. Could get . Guest the truth is that we do not know. It is not helpful to have the political flux that we are in that we are where we are. The sooner that we have a stable government that can start making those decisions and having those conversations the better but that is not going to be anytime soon. Anna thank you very much. Int, investors in australia limbo after an uncertain election result which could mean a Hung Parliament. 6 30 welcome back, it is in london. The u. K. Chancellor has set the goal of lowering britains tax rate in an effort to keep businesses investing in the country. He told the times he expects the result of the referendum and wants to mitigate the Economic Impact of the brexit. The French Economy minister has told bloomberg that paris is a contender for european business. Frankfurt andike dublin have been battling for transactions currently done in london. For a lot of financial players and institutions, the question mark. A our role is not to play on this uncertainty because we are collectively responsible and i think what we have to do is respect the vote and organize a brexit but at the same time, it could be positive because we have a lot of financial players and institutions and we can welcome a lot of institutions who would like to join. One of londons biggest law firms has threatened to take action if the government tries to initiate the belief without consulting parliament. The triggering of article 50 can only be done with the consent of parliament. The deadliest attack in baghdad this year has killed at least 115 people after a truck explodes in a shia neighborhood. Andarea has many stores restaurants, the blast coming after people had broken the ramadan fast. Louisville news 24 hours a day powered by more than 2600 journalists in more than what is countries, you can find more stories on the bloomberg cap. Anna thank you. And for a check on the market action. Heidi sometimes it looks like a tale of two markets because we are seeing that Risk Appetite in equity markets but you are seeing the move to a safe haven asset so let me start with asian stocks rallying for a fourth day. The asiapacific index building on an advance. We are seeing Oil Heading Higher today. Yennt to talk about the because it is weakening today as the bank of japan governor says more funding could be injected into the market should they be needed but the brexit has shiftd the biggest upward in the yen since 2008 so a Bloomberg Survey actually has the currency weakening to ¥107 to the dollar. That prediction tops the most bullish estimate at the turn of the year here in green, jpmorgans call at the turn of the year. The most bullish call is barclays predicting a rally to ¥87 this year. Not seen since 2013, three months before japan launched a stimulus program. This is the outlook towards the year end. Take a look at silver and gold. 21 and an ounce for the first time in two years. Outpacing gold. Some see it continuing to outperform. As for gold, gaining for a fourth day, and assets the highest since 2013. Anna thank you. A growing number of Analysts Expect a china bank bailout could be close to 915 respondents predict recapitalization in china within two years. Yousef joins us now. This is gone from being a niche expectation to something more mainstream . Absolutely. Not too long ago, you would have been considered fringe for thinking that this scenario would materialize. Of responders to over survey for see this happening within the next two years. A chart to together give you a better perspective in terms of how investors are feeling about this. This shows you the average price for chinas largest for banks. We have crossed it with the financials index so you can see what is being suggested, that it. S trading at an average of 32 you can easily pull of this chart on your bloomberg as well. The majority said that his bailout could exceed 500 billion. It is a far cry from the other predictions we have seen in the last few weeks but we have had some other views on that. The chinese yuan could be the centerpiece of the bailout and maintenance up to 30 . Anna thank you. Lets return to the political australia, the Australian Dollar falling after an unclear election result leaving no party with a majority. Vote counting will resume tomorrow but a Hung Parliament seems likely. Sydney. Ive in Political Uncertainty not just in europe. It is alive and well here in australia but the polls did predict this result. Looking at the Credit Rating agencies, they had an opportunity to react this afternoon. They may lower the rating if gridlock continues. Fitch seeing australia is still consistent with the aaa rating. Political deadlock that leads to widening of deficit would put downward pressure on the Credit Rating and that is probably what is going to happen. If we have a minority government , it is going to be difficult to have any meaningful reform through the house. We have got a recipe for total political paralysis and that kind of environment would create downward pressure on the Credit Rating. Paralysis. Ical when will we know what the next government looks like . Guest counting stars tomorrow but it could be possibly even good for the recounts looking and where we stand, the Ruling Coalition has 67 seats, the labor opposition has 71 and the magic number is 75. You can see the importance of the smaller parties did they will be called upon to help one of the parties for the minority government. Malcolm turnbull is confident it is going to be in. The situation, should he be right, is not going to be terrific. Navigating through a minority government will be challenging the jobhat when he took from tony abbott, he promised to deliver political victory. He has delivered complete chaos. 48 hours after the election was over there is already rumblings about possibly replacing him. Anna what does that mean for the economy . We will discuss that next. We have a chart here showing rate expectations. They will probably cut rates to 1. 5 . As with so many other players, it adds a layer of Political Uncertainty onto the already uncertain economic and macro environment. It is not surprising that the market is moving the way it is. It was interesting to read a gaslight piece talking about the Hung Parliament. It doesnt have any bearing on whether there is a great deal of political direction. Productivity gains were made. Are you able to separate the politics from what is happening in the underlying economy . Uest it is the uncertainty rating agencies are saying there is a danger that the fiscal situation can because if you have a government with an andent of horsetrading coalitions, it is more difficult to make fiscal choices. Exposed to concerns about the economy there. There is no certainty that a Coalition Government or political stalemate is going to be a problem. Globally, this in there is a concern that central left as the being only authority with the totals at their disposal to manage challenges ahead. That is a larger global conversation, isnt it . Guest everywhere, the Central Banks are under enormous pressure. They do not have many tools left they have a retake and rates down they do not have many tools left. They have already taken rates down to shore up their economies with the problems are wider than an economic slowdown. Demands a lack of global and in a range of different economies, Central Banks and governments have a limited ability to respond which is where this political turmoil feeds from. Linkageere is a lot of with the chinese economy. Into dubai, then expectation that government might be about to do something, and maybe even bailouts. Does that sound like that doesnt sound like the stimulus that markets are looking for good guest markets are looking for signs that Global Growth is strengthening. Comethat in time would more conventional policy from Central Banks, breathing space for governments and political is, itty but the truth feels like were going in the opposite direction. Next, National Bank of abu dhabi and First Gulf Bank are merging. Details next. Welcome back everybody. Independence day in the united states. Early on a monday morning. Lets get to rosalind chin. Postal savings bank of china could be offering the largest ipo this year. They have found a listing application with hong kongs talking stage. Analysts are confident that the ipo will be a success. Shares have job by 10 . The developer was halted in december after a consortium had been firing up equities become the biggest shareholder. National bank of abu dhabi has confirmed a merger with First Gulf Bank to create original. Owerhouse shareholders will hold 62 operating under the National Bank of abu dhabi name. The merger will allow lenders to compete with regional rivals like qatar National Bank. Tesla mrs. Vehicle deliveries after a production ramp. The carmaker delivered over 14,000 vehicles during the second quarter. The National Bank of of the david in First Gulf Bank have agreed to a merger that would form a lender which one is 75 billion of assets. For nextr is planned year. Lets can more with our executive editor in abu dhabi. Some big numbers but what is the significance beyond the numbers . As you point out, there are the numbers involved. This will create a larger market. Ap then some european banks very significant for the region. The significance goes beyond the simple transaction, it goes to the heart of what abu dhabi is trying to do. We know that the emirate is relying on oil revenue, trying to diversify. Is one stepank towards that, creating a Financial Center in abu dhabi, trying to diversify the economy. Other signs in terms of consolidation, another merger on way, all ipic. With things in europe with little regard for book value it is an interesting comparison isnt it, can we expect further bank sure, so it is to overstate the optimism here right now on the ground in terms of future pain consolidation. This is a region that has been bereft of mergers for almost a decade. The last we saw was in 2007 with the creation of emirates nbd. Been waiting for a while but it is difficult to get these deals given the controlling interest in a lot of these things. It is sometimes unusual to see a merger. Is different. The impetus is the low oil price and the desire to diversify the economy. We are seeing people talk about, this is the beginning of change in the region. Ther banks could field pressure including abu dhabi. Ommercial bank their shares were up yesterday as well on optimism of future consolidation in the uae so definitely something to watch out for. Thank you. Vote is a Growth Opportunity for the eurozone and Market Players according to various ceos at a business conference in provence. There is going to be a slowdown in construction. We do not know the magnitude. There when the in impact. I do not expect a Significant Impact elsewhere. On the other end, there is a positive dynamic in many countries in the Construction Market and i consider this will continue. Some participants, providers of Financial Services would have to get closer to the clients, clear assets in euro within the European Union. Paris, with the number of large companies, the depth of the talent pool, the depth of savings locally can be a legitimate player. Is an opportunity not only for france. Places,mpare these four other things, the quality of life, for example, is, in paris, probably the better than the rest of europe. Of course, for the French Economy ceos sharing expectations. In terms of market expectations, you have already changed your thinking on where the u. S. Goes as a result of the fallout . The fed has been treading carefully for several months and in common with other banks, they tend to pack away at the sign of trouble. The meeting was already going in that direction in terms of between now and september when. E thought rates would go up the september meeting, it looks unlikely the rates will go up. We need to see better data. Trying to see what the expectation is, only 12 . In theh expectation market . It has come right off and that is partly to do with the events elsewhere. Some of the data has not been involving as the said would like to see. It is keeping the fed on hold although they would love to get rates higher. Payroll reports into perspective, making them seem easy to manage. Thisare your expectations friday . Is 180,000. Nsus it is interesting. Times, payroll is in a large focus been now it seems to be overwhelmed. It would be helpful for the nervousness in the markets if we t a strong number suggesting that the u. S. Recovery is on track because going back to the lack of global demand, any signs of light we can see in the day your economy is going to be a welcome and conversely where waging in a soft reading, what is the lower yield story tell you in the u. S. . We have record lows. Around ring alarm bells u. S. Growth . It is both. Cycles, yields have not moved a great deal in either direction but certainly when they fall rapidly it tells you if there are concerns that this recovery will not amount to much. What we are seeing is the new normal of growth. We have qe going on in europe and japan and all of this has to find a home somewhere. Yields,it is in bond they have to find a home and positive yielding bonds are in short supply. What do you put the weakness in the u. S. Down to . In the past i know mark carney was talking about the psychological effect of the financial crisis that is still with us. Is that still the story . Has to be given a shock of the recent years, consumers and businesses and investors are very quick to feel alarmed whenever they see problems on the horizon and that tends to become selffulfilling. It is astonishing the fed has only raised rates once. I have a chart showing the appetite we have seen for this particular safe haven. Is brexit orr it any number of other issues, you can see why safety first is a mantra. You very much. Next, we take a look at how frances looking to profit from the brazen vote. Interviews coming to us come from bones. From provence. Anna battle for businesses, the French Economy minister says contenders are lining up to move to paris. We are collectively sensible and we have to respect the vote and to organize. At the same time, he could be our financial players. Anna lowering the u. K. Corporation tax rate in an effort to Keep Companies investing in the country. And will there be a downgrade in australia . They failed to produce a majority government putting credit at risk. Anna welcome to countdown. It is 7 00 in the morning here in london, Independence Day in the united states. Futures will be open, maybe some better gains. One of the stories over the asian trading day has been a continuation of the equity market rally but also a move into safe havens like Precious Metals because of the optimism around action from Central Banks. With that in mind, asiapacific up wiping out postbrexit losses. Nigeria having trouble enforcing a ceasefire in its oilproducing region. Rallies and other commodities, as well. The Australian Dollar around 0. 7 times. It dropped but then recovered. Neither large party in australia managed a majority more coming up throughout the hour. Silver was when the Precious Metals that it very well, now up more than 2 . Lets move on to the bond market. No u. S. Prisons this morning. No u. S. Presence this morning. Ompa rosalind George Osborne had set the goal of lowering britains Corporate Tax rate is 15 to keep businesses investing in the country. He expects the result of the referendum and wants to mitigate the Economic Impact of the brexit. Australias election has resulted in Neither Party having enough seats to form a government, undermining their Credit Rating, possibly. There are limited implications but it indicates a wider deficit. The Election Results have yet to be completely finalized. An increasing number of economists predict that chinese banks will receive the bailout within two years. Commonwealth bank is among the respondents in the latest survey saying they expect the move. The majority asked believed cost every capitalization will receive 0. 5 billion. One of londons biggest law firms has threatened to take action if the British Government tries to initiate the process of leaving the eu without consulting parliament. The triggering of article 50 can only be started with parliaments consent. The deadliest attack in baghdad in one year kills at least 115 people. A truck exploded in a mostly shia neighborhood despite heavy security. The area has many stores and restaurants. The streets were filled with people after breaking ramadan fast. Global news 24 hours a day in more than 120 countries and you can find more stories on our bloomberg app. Anna thank you. Breaking news from the construction sector. I mentioned this to put the referendum in some perspective. They are talking about how the referendum created uncertainty been now impacting operations underlying performance in line. Well see how that story develops. Lets check out how the markets are behaving. A good way to kick off the trading week. The strongest gains coming through in china. The hang seng is up 1. 5 . This is tracking the rally we have seen in commodities, everything from Precious Metals to steal. To steel. Up. Rials companies elsewhere, gains coming out of helped by a close weaker yen but underpinned by expectations that the boj will have to do something. We had a report on inflationary expectations, japanese corporations expecting they will be barely near their inflation target. Central pennsylvania to do more to support growth as well as keeping liquidity. I know youre going to talk about australia. Sydney stocks up by 0. 5 . We opened lower earlier but it soon turned to positive territory suggesting that whatever negativity that this uncertainty from the vote, the shortterm Market Movers that sentiment is holding up pretty well. The Australian Dollar recovering. The latest of the credit raging Credit Rating agencies say they may be moving on the aaa rating that australia appraises so highly if the parliamentary deadlock remains and that is the concern going into a Home Parliament or a minority government unable to pass through structural reforms. Gains in southeast asia, as well, led by singapore. It has been a very interesting session. Yields in japan which record lows anna thank you. In japan, breaking news from the mobile messaging business. They are trying to price their ipo. Now it seems they are increasing the price on the ipo saying they are changing the ipo price range to ¥3300 per share. They are increasing that, citing demand and market conditions. The brexit france overead with the claim london businesses. The French Economy minister has laid out why he thinks that paris is the new home for banking operations. I think for a lot of financial players and deeper marketplace in paris so that is something to be negotiated definitely into be discussed. I think it does makes. Anna we are live in paris now. He spent the weekend in provence. Ceos seem confident that france could get a piece of the financial cake . Is the euro clearing business . Several cities are competing to get a piece of the market. , at thering business moment, 70 of euro denomination thering takes place in u. K. , only 11 in paris and 7 in frankfurt. Despite the Bad Reputation in terms of doing business and the labor market, france and paris could get a part of this euro denominated clearing. He also said that europe should nextpart of the president ial campaign. He did not exclude that he should himself run for president. He said that the campaign should be a pro market, focusing on offering that alternative to french politics. Anna you also spoke to a number of ceos in provence. What are their concerns about the consequences of a present . Brexit . He was far from being the only one to think that this could be an opportunity for france, this could be a wakeup call for the country. Theng that he thinks that continent will be more relevant and some traders will clear assets in the eurozone including paris and amsterdam which is how are the best places. I also talked with another ceo to say that he had a slightly different perspective. For sure, it is an opportunity. If we compare these places, i not attacked have environment. Good things of the quality of life, for example, is, in paris, probably, the better. Some tashard a few parts of the come toiness could paris yes and, of course, for the French Economy, could not be bad. Despite the reputation of france, despite the difficulty we may have here sometimes informing the country i have to say i agree about french quality of life. Biasedou are entirely and all the better for it. Thank you. Welcome. And i have you been changing your asset allocations . How have you been rationalizing this . Guest let me start by saying this. I think we moved into the brexit in an environment in which equities were overpriced. I do not necessarily buy into this story that lower bond aggressivemore Monetary Policy is generating higher valuations. The market has taken the view that at the end the day i come back to this this is not just discounting, it is about economic volatility. Find it very difficult to argue that economic volatility is going to drop. Actually, that drives some risk premiums. It doesnt matter how you look at that uncertainty. s the response in terms of the markets looking at that not just last week but this morning i would find rather surprising. From an allocation we walked into this in being very conservative and we went even more conservative on the back of this. More treasuries, more anna gold, less equity. When you say you think it is are you that the questioning why we have traced all of our votes losses on the asiapacific, for example . Guest so, yeah, there are two arguments. Either people are expecting Monetary Policy to come in and we are going to get bailed out more people are taking the view that actually this is a marginal economic the uncertainty in the u. K. As pretty contained within the u. K. Rather than having affect elsewhere. I do think that there is an economic effect also on the eurozone on the back of this. There is going to be for their political fall out from office. No doubt we have not yet solved the eurozone crisis. If was to have an effect, then all of a sudden there are ramifications. Anna what to zero need to do to respond . Is the way that we prevent a quitaly more integration or slower integration and maybe the answer is different depending if you are in the eurozone . Guest i think the political revocations is really interesting that it appears that Angela Merkel is taking a conservatory view compare to the french. I am gone necessarily surprised i mean i am swedish listening to the swedish i guess the muchlishment also very concerned that the u. K. Being a business friendly element of the eu at this point will leave the eu that is less business friendly. It is interesting listen to what is coming out of provence, that might be optimistic in terms of the ultimate effect in terms of what this means for the eu. There is clearly risk about rexit. Or not that is f anna there are many names, it seems. Thank you. Next, cranking up the heat, theresa may. Anna welcome back. We should be a little stronger at the start of the trading day for the pound. Lets return to the london stock voting whether to approve takeover by german leaders have been questioning basing the headquarters outside of the eu. Joining us now for analysis, that laboratory. Manuel man well what is happening now . Guest you are right. It is a political debate at this moment. The deal, both companies have acknowledged that it makes strategic sense so they want to push and get it done. It has become much more of a initical battle rather than any business strategyoriented in negotiations so unless shareholders voting on the deal, then deutsche verse will have a few days until july to tender their shares and the next few days are going to be quite interesting. Indi anna in general, looking at the backup, one imagines that this Political Climate is not conducive to a lot of dealmaking . Exactly. We were coming from a very choppy market compared to the last two years that were very strong, the beginning, the first half of the year wasnt as strong as one would have expected but there was a lot of uncertainty in there. He was market volatility at the brexitng then as the everybody,ched, every dealmaker not there was putting everything on hold. And the unexpected happened, so now, what was meant to be busier than usual summer will be rather d because people rather because people need more clarity what the landscape will be. Ull anna thank you very much. Lets return to the u. K. Politics. Two of the pm candidates have turned their fire on theresa may the u. K. Ng on the bbc, justice secretary michael gove says the country needs someone who supported brexit. I am in this contest because i want to advance the argument in principle. We need to have the next Prime Minister someone who believes that britain should be outside the European Union and argued for it. I have always taken difficult decisions because about my principles first. Anna thousands marched on london to protest the decision to leave the eu. Frederick is still with us. This political backdrop is still uncertain, leading you to a riskoff stunt. Some Historical Context for us. Even through the eurozone crisis, i would argue that not only are we bad from an uncertainty point of view, but also in terms of looking at the uncertainty, what that means from an Economic Perspective, how to think about this from a valuation perspective. Where we find risk premiums, it is to some extent in the u. S. It is still 10 . Some allocations still relatively large allocations in emerging market debt. 21 both in local in hard currency debt but then large ourcations now with 20 of allocation going into treasuries so this is a significantly conservative position to be taking it on top of that we have 10 in goal again, i have not seen since 20102011 anna what you make of this rally . Participants sitting equities higher, or they buy into some sort of false hope . Why is this different . When you to think about this from the cyclical point of view. Having said that, there is no data over the next twothree months that will tell us where we are so but having said that, we have always picked up really from the last few months, still in an environment which is highly fragile from an Economic Perspective is cyclical data is improving the way that we hope it would be doing aware at the latter stages of an economic expansion, all of which means that we are now not in a place where you should be loading up on equity is now having said that, equity markets, but also to some extent have taken the view this is much more about Monetary Policy and support from them. Have soe of the we many unknowns in terms of the political landscape, the takingtions currently center stage but secondarily, we have a great deal of unknowns in terms of where domestic policy goes. 15 Corporation Tax now being floated. It is a government going to come around to finding some opportunities to compete as opposed to stressing the negatives . I think if i were sitting on that side i would say, we need to improve our competitiveness, move towards lower taxes, etc. In order to make sure that the world looks at the u. K. As a business from the nation. That is the only way to offset some of the uncertainty that i would also argue that there is uncertainty around the world. There are uncertainties in australia this morning that there are uncertainties with debt levels i mean, the world is more into it it now than we seven, with a politically veryunexpected can come to pass. Thank you very much, frederick. That will do it for countdown. N the move is next features suggesting google be stronger by the end of the trading day. Regaining losses after last week. We will see if that carries through into the european session. It does look to be stronger. A sunny morning here in london. This is bloomberg. You guys be good. Ill see you later [ bark ] [ bark ] bye. See ya pal. Ever wonder what your pets do when you leave home . [ laughing ] aw you cutie pie. Aw. Aw. Aw. Aw. [ barking ] [ washing machine running ] partys on know what your pets are up to with xfinity home. Xfinity. The future of awesome. See the secret life of pets, in theaters july 8th. Y welcome to on the move Caroline Hyde is on assignment. What are we watching . Idea ofsborne flows the cutting Corporation Tax of 15 . Will it be enough to keep business in britain . The landgrab begins. Paris should be the new home for euro clearing. Do the germans agree . The uae merges its